I'd like to get a few honest opinions on where the market is headed after the criminal acts in NYC. I thought we were poised for a gradual recovery; now I'm not so sure.

-- Tom Nadeau (pcassembler@mindspring.com), September 12, 2001

Answers

The markets will react sharply downward. Stability is factored into the price of stocks. For stocks to be a worthwhile investment, a long stable period is needed for a company to bring profits to the table for investors to realize some meaningful return on investment. Up until now, the expected stability was measurable in decades. This act of terrorism reduces the expected stability markedly. Maybe 6 months or a year from now, stability expectations can go up some, but until they do, the market will head south and stay there. Stocks with high P/E ratios are to be the hardest hit since they are more heavily leveraged on there being stable economies to maintain double digit growths. Ironically, after tomorrow, the P/E ratios of many companies will be at more realistic levels than they have been in a long time.

-- private (marketgeek@aol.com), September 12, 2001.

My opinion is not that of an expert, so it may not be reliable. However, I have one, and it is:

The market is headed in the direction of unfettered capitalism. Corporations merging, even mega-corporations merging. Smaller corporations filing for bankruptcy. Large, government-favorable corporations receiving multi-million-dollar bailouts.

Capital is gravitating even faster towards itself. Much like the separation of classes amongst citizens, business is becoming highly polarized in many sectors. Many rich people working together to become even more rich, at the expense of investors and small to medium-sized businesses.

Legislation in the past year or so, combined with current and future legislation, favors mega-corporations. Loss of civil rights and liberties will not affect these businesses. Our government knows how important it is (for their own ulterior motives) to keep the U.S. economy propped up. Whether or not it is legitimate, they care not.

Just take a look at the heavy insider trading of American Airlines and United Air Lines in the days PRECEDING the terrorist attacks. Make your own conclusions upon reading the linked article. My intuition tells me that article is based upon truth, and that truth HURTS.

The stock market is one of the best and easiest ways for rich business executives to become even more rich. There are supposedly laws against insider trading, but time and time again, it happens.

My ultimate opinion on the direction of the market is down, and for at least another whole year. The problems within the market itself cannot be remedied by time. Serious reform in ethics and the application of business law (like antitrust) must happen for the market to improve.

-- Al Boulley (aboulley@sagchip.org), November 29, 2001.